More and more, older students are returning to college to complete their undergraduate work, learn a vocation, or get advanced degrees. These new students are often balancing family, work, and school and time as well as money is stretched thin. If you’re in this position, getting education loans can help ease the financial pressure.
By far the largest source for education loans is the federal government. As long as you’re attending an accredited college or vocational school, you can fill out the Free Application for Federal Student Aid (FAFSA) online. If you qualify, the government will pay the interest on your student loan while you’re in school.
After you graduate, you’ll have a six-month grace period before you are required to start making payments on the loan. The interest rate is fixed; if you run into problems repaying your education loans, you may be able to defer (put off) payments or arrange to pay less for a time.
All of these factors make federal student education loans very attractive, but the government is strict about repayment. Student loans cannot be cleared by bankruptcy, and students who skip out on their education loans may be subject to garnishment of wages, withholding of federal and state income tax returns, etc. Furthermore, students who default on one loan are ineligible for any future loans.
Another option is to take out a private education loan from a bank. These programs differ from bank to bank, but many will, like the federal student aid program, allow you to put off making payments until you are out of school. Your best option for a private loan is to shop around to find the best interest rates and repayment terms. If your credit rating is good, you’ll likely be able to bargain for better terms. If your credit rating is poor, you may not qualify for a private loan.
More information on education loans is available at FinAid – The Smart Student Guide to Financial Aid.